APRIL 24, 2008: The price of farmland is rising at its fastest rate for more than 30 years, according to a report in The Independent newspaper.

It says the huge hike has come as wealthy city dwellers and overseas buyers seek a slice of idyllic rural England and jittery investors rush to move their money out of stocks and shares because of the global credit crunch.

In contrast to falling residential and commercial property values, the average price of farmland rose by more than 10 per cent in the first quarter of 2008, according to a study of agricultural property sales. Arable land, in particular, has become so profitable that its average price has soared from £4,000 an acre in January last year to £5,500 an acre now.

Andrew Shirley, head of rural land research at the Knight Frank estate agency, which conducted the study, was reported as saying: "So far this year, we have seen some of the same trends we saw last year but at an even more accelerated pace."

"We have seen farms in Kent and Dorset sell for more than £6,000 an acre and another batch in the North-west go for £5,000. This time last year, the same farms might have fetched £3,500 per acre – that is nearly a 75 per cent increase in some areas."

According to the Royal Institution of Chartered Surveyors, the value of farmland rose by 28 per cent during the second half of 2007. The last time agricultural property prices increased at such a rate was during the late 1970s, when annual increases of 40 per cent were common. Knight Frank believes prices will continue to rise by between 10 and 20 per cent this year.

The increases are being fuelled by the astonishing demand for agricultural holdings at a time when food prices are at an all-time high and when very little farmland is coming up for sale.

The Independent reported that Savills Private Finance, an independent mortgage broker, said the amount of land coming on to the public market each year was down from about 600,000 acres per year in the 1960s to 125,000 acres a year today.

However, demand has never been higher. For the first time last year, so-called "lifestyle farmers" – City traders and investors who use their wealth to pursue agriculture as a hobby – overtook bona fide farmers as the chief buyers of agricultural property.

Knight Frank's figures for 2007 show that 38 per cent of farmland was bought by agricultural enthusiasts, compared to 32 per cent sold to traditional farmers. However, other estimates suggest that lifestyle farmers bought 45 per cent of the available land.

The price of wheat and other cereals has more than doubled in 12 months. While that means the cost of food is going up, it has also improved the profitability of arable farming and made it an attractive investment. At the same time, Britain's agricultural land is attracting interest from abroad.

Some estimates suggest prices will continue to grow by between 10 and 20 per cent in the next 12 months.